1. APERC Workshop at EWG47, Kunming, China 19 May 2014 4. Oil and Gas Emergency Exercises 4-2. Joint Southeast Asian Exercise Elvira Torres-GELINDON Senior Researcher, APERC

2. OUTLINE OF PRESENTATION Background of the 7 Economies Oil and Gas Supply and Demand INTRODUCTION 1 st Stage Scenario Response FIRST STAGE SCENARIO 2 nd Stage Scenario Response SECOND STAGE SCENARIO Comments Recommendations FROM THE EXPERTS 2

3. THE SEVEN ECONOMIES Thailand limited domestic oil production and reserves; imports make up a significant portion of its oil consumption; holds large proven reserves of natural gas Viet Nam Imports about 70% of oil products; produces gas for its domestic consumption Malaysia well-endowed with conventional oil and gas resources, produces 13% of the world’s LNG exports and exports crude oil and piped gas; both exporter and importer of petroleum products. Brunei Darussalam net exporter of oil and gas (LNG), but imports about half of its refined petroleum products’ supply Philippines modest indigenous energy resources, and imports most of its oil and petroleum products Indonesia considerable amount of natural gas reserves and currently producing 8 BCFD, half of which are exported as LNG and piped gas; imports about 40% of its crude oil Singapore no indigenous hydrocarbon resources and imports all of its crude oil and gas requirements, but one of Asia's main energy and petrochemicals’ hubs and of the world's top-three oil trading and refining centers 3

4. SUPPLY and DEMAND OIL (ktoe)BDINDMASPHSINTHAVN Supply773817332912712753138624522220203 Indigenous887651322313113131925916053 Import2764112320882150291449944389012703 Export(8200)(21332)(21315)(1420)(83790)(11145)(9652) Demand 62464519239031129687663747218131 Transpo Stockpile policy 31 daysHSD/ADO -21 COD; Avgas- 28 COD. No existing policy Commercial oil stockpile of 30 days Mandatory oil stock = 45 days 60 days GAS (ktoe)BDINDMASPHSINTHAVN Supply2621462142881934736605399138123 Indigenous1189081992480753473310938123 Import597766058820 Export(9291)(35778)(25233) Demand 27169967347821236414493 Power IndustryPower 4

5. FIRST STAGE SCENARIO WAR Anonymous - hit the key infrastructures in Iran (2.68 mbpd), Iraq (3.14 mbpd) and the GCC countries 17 mbpd), resulting in a temporary disruption of oil and gas productions; - Saudi Arabia (crude oil production: 9.56 mbpd in 2013) and Qatar (crude oil production: 0.73 mbpd in 2013 - hit the key infrastructures in Iran (2.68 mbpd), Iraq (3.14 mbpd) and the GCC countries 17 mbpd), resulting in a temporary disruption of oil and gas productions; - Saudi Arabia (crude oil production: 9.56 mbpd in 2013) and Qatar (crude oil production: 0.73 mbpd in 2013 suspend crude oil and gas production and exports, at least 10 days Al-Qaida JIHAD Al-Qaida stages surprise terrorist attacks on major GCC crude oil and gas export facilities, e.g. Ras Tanura (SA), Mina al-Ahmadi (Kuwait), Messaid and Ras Raffan (Qatar), Ruwais and Das Island (UAE) spot crude oil price - $130/bbl spot LNG price - $20/million BTU spot crude oil price -$170/bbl spot LNG price $25 per million BTU crude oil and LNG exports thru’ the Strait of Hormuz halved for at least 2 months Middle East SEA 5

6. EMERGENCY RESPONSE Emergency arrangement together with affected government Government’s Initial Actions Implications or economic damage Assessment of Direct Impact Priority policy Basic Stance of the Government Energy supply action which will be taken by concerned government Energy Supply Measures Energy measures to be taken for each consumption sector Demand Side Measures Other possible measures to be taken Other Points for Consideration 6

7. ECONOMY’S RESPONSE Government’s Initial Action 7 Responses vary according to the available resources and contingency plans of the seven economies. Generally, the government’s initial action involves the mobilization of the agencies concerned with energy and emergency situations: BBrunei- coordinate with its lead disaster agency, NDMC; IIndonesia –monitor the situation and work closely with APEC RTEIS; MMalaysia - direct relevant agencies to prepare reports on the impact of the emerging situation, such as the PETRONAS, office of the Prime Minster, etc; PPhilippines –convene the Inter-Agency ECC which consists of the DOE as the Lead Agency, DOF and DBM; SSingapore – monitoring through the Risk Assessment Horizon Scanning (RAHS) programme office; TThailand – meet with Fuel Management Committee and several agencies; VViet Nam – MOIT leads the emergency meeting with Committee on the State Management of Domestic Market;

8. ECONOMY’S RESPONSE Economic Impact 8 Brunei Indonesia MalaysiaPhilippines Singapore Viet Nam Thailand Major consequence, however, will be the increase of prices of commodities, which is common to the seven economies  Oil/Gas price increases will initially benefit exporting economies

9. ECONOMY’S RESPONSE Energy Supply Measures diversification of oil and gas sources to meet domestic demands Increasing respective domestic productions and decreasing exports to give priority to own demand Releasing oil stock; reducing feedstock for non-energy use; activation of APSA; rationing 9

10. ECONOMY’S RESPONSE Energy Demand Measures Car pooling Shifting in working hours use of alternative fuels 10 Energy demand measures involved, strict implementation of energy conservation

11. SECOND STAGE SCENARIO Specific to economy 11 accident in a pipeline from an offshore gas field to Lumut BRUNEI DARUSSALAM explosion at one of the pipeline’s eight compressors and receiving stations INDONESIA accident in an offshore pipeline from the West Natuna Gas Field MALAYSIA production halt at the Malampaya Gas Field due to typhoon PHILIPPINES accident at the production and shipment facilities of the West Natuna Gas Field SINGAPORE accident in a JDA district THAILAND accident in a pipeline from the Bach Ho/Rong Gas Field VIET NAM

12. ECONOMY’S RESPONSE Alternative fuel for power and transportation Rationing and limiting exportation 12 Energy Conservation mobilization of government agencies concerned with energy and emergency situations affecting respective economies Activation of APSA * * APSA - is covenant among member states in the ASEAN that establishes petroleum sharing scheme aimed at assisting member state(s) in time of emergencies due to petroleum supply shortages.

13. COMMENTS (1)  Commended the participating economies’ immediate response, especially for the 2 nd scenario, which was very short; participants were very knowledgeable;  Improvement on the response by providing additional information on the specific coordination with oil and gas suppliers/traders;  Alternative fuel use is an effective mitigating measures, only for the long term, but for an ongoing emergency situation such as oil disruptions due to civil wars, natural calamities, etc; alternative fuels or RE may not be a feasible immediate solution 13

14. COMMENTS (2)  May include measures to be undertaken for those economies which has an existing oil and gas trade agreements with other economies/countries;  Though not yet clear how it works, most economies are positive on APSA as potential vehicle for regional cooperation for oil and gas supply crises;  Clearly for gas emergency situations, there is much less knowledge of mechanisms/policies to deal with supply disruptions as compared to oil emergency situation. 14

15. GENERAL RECOMMENDATIONS (1)  A need to include some statistics to clearly show the implication of an emergency situation in the economies’ supply and demand situation;  Further analysis on the effect of oil and gas emergency situation particularly in the demand side and the key measures to be implemented accordingly;  For better understanding of the effect; a need to include the other sectors of the economy which would likely be affected by oil and gas emergency situation other than the energy sector; 15

16. GENERAL RECOMMENDATIONS (2)  Need to include plans for human capability enhancement who can be tapped during oil and gas emergency situation;  Need to identify further the possible institutions of the economy that would be involved in the emergency exercise; and the respective institutions’ key priorities;  Need to show the possibility of integrating the emergency responses to the respective economies’ Plan of Action;  Identify further the strengths and weaknesses that an oil and gas emergency situation can bring to the economy; 16

17. THE EXPERTS Mr. Cuauhtemoc LOPEZ- BASSOLS IEA Mr. Victorino Salvaleon BALA ASCOPE Dr. Eri PRABOWO HAPUA Dr. Phoumin HAN ERIA Dr. Chatchawan CHAICHANA Thai Academe Dr. Ucok Welo Risma SIAGIAN Indonesian Academe Dr. Woonam SEOK Korea Ms. Junko YADA Japan Dr. Ken KOYAMA IEEJ Mr. Koichiro TANAKA IEEJ/JIME Mr. Hiroshi HASHIMOTO IEEJ 17

18. APERC TEAM Mr. Takato OJIMI APERC Dr. Kazutomo IRIE APERC Mr. Goichi KOMORI APERC Ms. Elvira Torres- GELINDON APERC Mr. Chrisnawan ANDITYA APERC 18

19. PHOTOS 19

20. THANK YOU FOR YOUR ATTENTION